The Hindu Business Line : Rupee posts sharp gains, bonds fall

MUMBAI: The rupee substantially appreciated against the dollar on Wednesday in tandem with the global rally of some of the major currencies against the greenback.

The domestic currency opened at 44.84, up from 45.04 on Tuesday. It then touched an intra-day high of 44.76 and finally closed the day at 44.79.

There was also some corporate buying of the dollar, which caused the rupee to dip during the day. In the forward premia market, the 6 month ended at 1.15 per cent (1.07) and the 12 month at 0.87 per cent (0.85).

The bond market fell for the second consecutive day ahead of the Rs 10,000 crore auction. Though prices gained seven to eight paise in the morning session, it was followed by a continuous sell-off. The net loss at the end of trading was around 10-12 paise, said dealers.

"Traders may have built in positions as the auction is scheduled for next week. As of now liquidity is fine," said a dealer with a private bank.

The 8.07-12-year 2017 paper opened at Rs 106.72 (7.18 per cent YTM) and closed at Rs 106.65 (7.19 per cent YTM) lower than the earlier level of Rs 106.69 (7.18 per cent YTM). The 10.25-16-year 2021 paper opened at Rs 126.72 (7.32 per cent YTM) and ended at Rs 126.64 (7.33 per cent YTM), slightly lower than Tuesday's close of Rs 126.67 (7.33 per cent YTM).

The call rate was between 5.5 and 5.6 per cent (5.5-5.6 per cent), which is a considerable improvement, said dealers.

In the first one-day reverse repo auction, RBI received four bids for Rs 750 crore and eight bids for Rs 2,415 crore in the second auction. There were bids for the repo auction.

In the CBLO market, there were 379 trades for Rs 19,040.5 crore in the range of 5.31-6 per cent.